Nationalization as Credible Threat Against Tacit Collusion
Quaderni - Working Paper DSE N° 972
19 Pages Posted: 23 Oct 2014
Date Written: October 23, 2014
Within a simple model of differentiated oligopoly, we show that tacit collusion may be prevented by the threat of nationalising a private firm coupled with the appropriate choice of the weight given to private profits in the maximand of the nationalised company. We characterise the properties of such a threat and prove that it may allow to credibly deter tacit collusion.
Keywords: tacit collusion, nationalization, mixed oligopoly
JEL Classification: H13, L13, L32
Suggested Citation: Suggested Citation